Wrightson gets debt reprieve, posts loss on writedowns

Thursday 26th February 2009

PGG Wrightson, New Zealand's biggest rural services company, posted a first-half loss on costs of its failed transaction with Silver Fern Farms and a writedown of its stake in New Zealand Farming Systems Uruguay.

The net loss was $32.8 million in the six months ended December 31, from a profit of $34.6 million a year earlier, the company said in a statement. Sales rose 32% to $737.7 million while the writedown of its Farming Systems stake amounted to $35 million.

Shares of Wrightson climbed 4% to 75 cents after the results, having slumped 48% this year amid concern its balance sheet had been weakened at a time when debt repayments were looming. Today the company said its banks had agreed to refinance about $475 million in loan facilities, with the company having drawn $410 million as at the middle of this month.

The arrangements now in place are $75 million of seasonal working capital through until April 2010, a $125 million amortising facility that ends in December 2010 and $275 million of 'core' debt through until September 2011.

The company now has "a 21-month period to reduce PGW's leverage to levels acceptable in the current credit environment," managing director Tim Miles said.

The company reiterated its forecast for full-year earnings of $39 million to $45 million.

Wrightson also said in has received assurances from major shareholders Pyne Gould Corp. and chairman Craig Norgate's Rural Portfolio Investments that they won't dump shares in the market and remain committed to the company.

In October, Wrightson said it was unable to settle the $220 million acquisition of a half stake in Silver Fern Farms because of the global credit squeeze.

By Jonathan Underhill

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